fr'gt paid to supplier eligible for service tax

Hi! Saurabh
Accoroding to me ultimately consignor not consignee will bear the cost of freight and service tax paid by him on this behalf.
He will the supplier of goods the total amt alongwith service tas then claim the reimbursement for it from consignor as consignee bear the freight and all other exp on consiged goods on behalf on consignor so ultimately consignor not consignee will bear whole freight alongwith service tax paid on any service for it

service tax is to be paid by consignee or consignor who pays freight eithr himself or through his agent.

If consignee paid freight and get it reimbursed from consignor, it is consignor who incurres expense. And he is liable to pay tax directly to Dept.

As you know, in several other  cases it is the GTA who is liable to pay tax.

Dear Mr. Tony,

Service Tax is payable on the basis of Receipt, in case of GTA on the basis of payment. So  who is bearing the expense has nothing to do with payment of service tax.

Reimbursement of freight  by eithre party can be made, it is matter of understanding, but the person who pays or is liable to pay freight is the person who is liable for ST payment.

As per the definition – Service Tax Rule 2 (1) (d) (iv)

“in relation to taxable service provided by a GTA, where the consignor or consignee of goods is,- (a) ….to…(g)… - Any person who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road IN A GOOD CARRIAGE.”
-Shall be liable to deposit ST.

In normal course any person who pays means - Freight is “ paid or Freight To pay “ and if it is TBB means the person in whose name the freight has been billed is liable to pay the Freight. Thus, the liability of ST depends on the term of freight payment and is of the person who pays i.e. “Freight paid (consignor) or Freight To pay (Consignee)“, or who is liable to pay i.e. TBB (consignor/ consignee).

Regards.

Dear Mr. Anand
Consider a situation
If a contract is entered between a transport Contractor(not having GTA registration )  and Company (Consignee)/manufacturer. Consignor inturn appoints sub contractor (got GTA) who issues their Consignment Note in the name of Consignee, and giving declaration that Service tax is to be paid by consignee.
1. Subcontractor pays freight to the truck drivers/owners and recovers freight from  
   contractor (at a rate agreed between them).
2. Contractor raises a bill on company, giving declaration that service tax has to be
   pad by billed party (i.e)Company, and Contractor has not availed service
   tax/cenvat on inputs or capital goods.
3. Company pays freight to contractor and pays service tax to Dept and avails service
   tax.

As per your reply Freight payment by Sub contractor and Service tax discharging by Cnsignee/company, Is not proper.
but department accepts that.
Regards
Naidu

Dear Mr. Naidu,

My reply was in relation to transaction between seller and purchaser, whereas transaction mentioned by you is between service provider and service receiver.

Look-

Parties                 = Driver      + Subcontractor + contractor + consignee

Consignment note = No          + Yes              + No           + No

Payment flow         =receives   +   <               +   <           +  < (ultimate payer)
now -

1. as per the definition, sub contractor issues C/N so he is GTA. So, Payment to subcontractor is relevant for the purpose of ST.
2. Payment to driver is not payment to GTA, but payment to subcontractor is payment ot GTA, payment by contractor and ultimate payment by purchaser is payment by agent on behalf of purchaser. So department is right on considering service tax by company.

Pl. Note that both the situations are different. In earlier querry, there is transaction on principal to principal basis, i.e. by purchaser and seller, whereas in case of your mentioned situation there is service providing.

Regards.

Chauhan Anand N.

Dear Mr Anand

Sub contractor cannot be considered as agent, A agent is a person who acts on behalf of principal. In this case, there is a contract between Company and Subcontract. There is Truck owners work for subcontractors and get payment from subcontracts.

Just because he is subcontractor he can not be treated as agent of principal.

IN this particular case there are more than one GTA's. 1st is contractor who works for company, 2 nd is subcontractor who works for contractor, but since subcontractor issues consignment notes, and declares that he has not paid service tax, consignee being the company has to pay service tax, which is eligible for service tax credit.

Regards
Naidu

in case of GTA only the government has brought in changes through Finance bill no. 73, that if the person is any of the  6 specified then he has to pay st, the liabilty is on the person if he is in six and is held as liable for payment  in the consigment note , then he has to pay st on actual freight amt. irrespective who is collecting it.  

if i paid any payment to government on behalf of client & get reimbursed back from client is this transaction attract Service tax or not ??????